If you are looking to invest in a Malaysian company, you may come across a share subscription agreement. This is a legal document that outlines the terms and conditions for purchasing new shares in a company. In this article, we will break down what a share subscription agreement is and what you need to know before signing one in Malaysia.
What is a Share Subscription Agreement?
A share subscription agreement is a legal contract between a company and an investor. It outlines the terms and conditions for the investor to purchase new shares in the company. The agreement typically includes details such as the number of shares being issued, the price per share, and any conditions or restrictions on the shares.
Why is a Share Subscription Agreement Important?
A share subscription agreement is important because it protects both the company and the investor. It sets out the terms of the investment, so there is no confusion or misunderstandings later on. For the company, it ensures that the investor is aware of any conditions or restrictions on the shares. For the investor, it provides a clear understanding of their rights and obligations as a shareholder.
What Should be Included in a Share Subscription Agreement?
A share subscription agreement should include the following:
1. Details of the company: This should include the name and registered address of the company.
2. Details of the investor: This should include the name and address of the investor.
3. Number of shares: This should include the number of shares being issued to the investor.
4. Price per share: This should include the price per share being paid by the investor.
5. Payment terms: This should include details of how and when the investor will pay for the shares.
6. Conditions: This should include any conditions or restrictions on the shares.
7. Representations and warranties: This should include any representations and warranties made by the company.
8. Governing law: This should include the law that governs the agreement.
Key Considerations for Investors
Before signing a share subscription agreement, investors should consider the following:
1. Do their own due diligence on the company: Before investing in a company, investors should do their own research to ensure that the company is a good investment.
2. Understand the terms of the agreement: Investors should read the agreement carefully and ensure that they understand the terms and conditions.
3. Seek legal advice: Investors should seek legal advice before signing the agreement to ensure that it is in their best interests.
Conclusion
A share subscription agreement is an important legal document that outlines the terms and conditions for purchasing new shares in a company. It is important that investors understand the terms of the agreement and seek legal advice if necessary. By doing so, they can protect their investment and ensure that they are making a sound financial decision.